Granite buys industrial dev. land, 3 properties in U.S., Europe

Granite REIT (GRT-UN-T) has acquired industrial properties in the U.S. and in Europe, agreed to purchase a third, and partnered with an American industrial developer to buy a large parcel of development land in Houston.

In total, the purchases represent an expenditure of almost $154 million (all terms Cdn). The three industrial properties comprise almost 1.4 million square feet, while the development land is 191 acres.

Granite and its partner, Kansas City-based NorthPoint Development, plan to build a 2.5-million-square-foot business park at the site.

“These acquisitions and development will further advance our strategy of acquiring and developing leading-core product in key e-commerce and distribution markets in North America and Europe,” said Kevan Gorrie, Granite’s president and CEO, in a release announcing the deals.

“Collectively, we expect these transactions to further enhance the quality of our portfolio, generate stable and growing cash flow and provide an opportunity to create significant net asset value growth for our unitholders.”

Granite is funding the acquisitions with cash on hand.

For the industrial properties, Granite says the in-going weighted average yield is approximately 5.8 per cent. The properties are fully leased with a weighted average lease term of 5.4 years.

Houston development land:

This greenfield site along U.S. Hwy. 90 in Houston was acquired for $33.9 million on July 1. Granite and NorthPoint plan a multi-phased business park capable of accommodating buildings ranging from 250,000 to 1.2 million square feet.. Speculative construction of Phase 1, consisting of two buildings totaling 625,000 square feet, is anticipated to begin in Q3 2019.

The project is expected to generate a development yield spread of greater than 200 basis points. NorthPoint will be the development manager.

The site is within Houston’s northeast submarket, approximately 12 miles from downtown Houston and 10 miles from the Port of Houston, the largest export port in the U.S. The property has good access to Houston’s extensive interstate system, the city’s three class-I railroads and the Houston International Airport.

“We are pleased to launch our first partnership with NorthPoint Development, a leading developer of new generation distribution properties in the U.S.,” Gorrie said in the release. “The Houston project will enable us to build scale in a strategic location in one of our target U.S. markets and the project is expected to generate superior returns and net asset value growth, both important components of our investment strategy.”

1901 Beggrow Street, Columbus, Ohio:

This 802,390-square-foot distribution facility features 36-foot clear height and is situated on 51.1 acres of land.

The state-of-the-art building was completed in 2018 and is leased to a subsidiary of Pepsico, Inc. The acquisition was announced on April 11 and closed on May 23.

Columbus provides access to nearly 60 per cent of the U.S. and Canadian population within a day’s drive. The property is also strategically located within two miles of the Rickenbacker International Airport, one of the only cargo-dedicated airports in the world.

The building can be expanded by approximately 200,000 additional square feet.

Granite’s purchase of this distribution centre at Heirweg 3 Born, Netherlands, is its first since opening an office in the country. (Courtesy Granite)

Heirweg 3 Born, Netherlands:

This 259,388-square-foot distribution centre is located on 7.4 acres of land in an established business park.

It is in close proximity to an inland port, rail and the A2 motorwayConstructed in 2008, the property is leased to Broekman Logistics.

The acquisition closed on July 8.

“The acquisition of the Heirweg 3 property in the Netherlands represents our first acquisition following the opening of our new office in Amsterdam,” Gorrie said in the release. “This office will increase our presence in a key target market and enhance our ability to execute on a strong pipeline of opportunities in Europe.”

1222 Commerce Parkway, Horn Lake, Miss.:

This 300,145-square-foot, 32-foot clear height distribution centre includes 20.9 acres of land and is just 15 miles from downtown Memphis, Tenn.

The property was constructed in 2018 and is leased to DSV Solutions and EPE Industries. It offers access to Interstate 55 and proximity to the Memphis International Airport which is home to the FedEx World Hub.

The acquisition is subject to customary closing conditions and is expected to close in the third quarter of 2019.

About Granite and NorthPoint

Granite is a Canadian-based REIT engaged in the acquisition, development, ownership and management of industrial, warehouse and logistics properties in North America and Europe. Granite owns over 80 rental-income properties representing approximately 34 million square feet of leasable area.

NorthPoint Development is a privately held firm focused on development in the industrial and self-storage markets in the central United States. It is currently active in 21 states including Kansas, Missouri, Texas, Illinois, Tennessee, Ohio, Indiana, Kentucky, Michigan, Pennsylvania, California, Arizona, Washington, New York, Georgia, and Florida.

NorthPoint is one of the most active industrial development firms in the U.S., having developed over 67,300,000 square feet of class-A industrial product since 2012.